Firms unable to sell land amid slowdown, note ban

Glaxo Smithkline has been planning to sell 60 acres in Thane near Mumbai for a while now. Its factory in Thane was shut in 2011. The company came close to selling the land in 2014, but the deal fell through due to legal hurdles.

Glaxo Smithkline has been planning to sell 60 acres in Thane near Mumbai for a while now. Its factory in Thane was shut in 2011. The company came close to selling the land in 2014, but the deal fell through due to legal hurdles.

Amid the prolonged slowdown in residential real estate and the demonetisation’s economic fallout, several companies have been unable to attract buyers for their surplus land. Some of these firms are multinational drug major Glaxo Smithkline Pharma, Ashok Piramal group’s Peninsula Land, and real estate firm HDIL.

Glaxo Smithkline has been planning to sell 60 acres in Thane near Mumbai for a while now. Its factory in Thane was shut in 2011. The company came close to selling the land in 2014, but the deal fell through due to legal hurdles.

The company reinvited bids in August to sell the land for around ₹1,800 crore, but got no response. Sources said Glaxo Smithkline is now considering joint development, wherein a revenue-sharing deal can be made with the developer. GSK didn’t respond to HT’s email.

Similarly, Peninsula Land has been looking to sell around 180-200 acres in several cities for over a year to cut its debt. The company has been in talks with prospective buyers but said no “definitive agreements” had been made.

“We have made a lot of progress … we are close (to reaching a deal),” said Rajeev Piramal, vice-chairman and MD of Peninsula Land.

On whether Piramal planned to acquire more land, Piramal said developers didn’t have much appetite to buy large tracts of land where factories once stood.

He further said in today’s environment risk appetite was low as in the future, one wouldn’t be able to launch projects early unless all approvals were in place.

Real estate firm Housing Development and Infrastructure (HDIL) has also been planning to sell some of its land in Virar and Palghar, located on the outskirts of Mumbai, for some time.

Over the last year, demand in Mumbai’s real estate market has been flat. Moreover, prices are expected to fall by at least 15-20% as demand may drop further due to demonetisation.

Analysts say the current market environment is not conducive because there is too much uncertainty on the sale of finished products.

“There will be uncertainty for the next six months. Land is valued on the basis of backward calculation. So people will be wary of buying land,” said Gulam Zia, executive director at realty consultancy Knight Frank.